Oil and Gas Prices Jump as Strikes on Gulf Facilities Escalate

u6s8vm3gtzkqgqjlh5akk7)s_media_dl_1.png Institute for the Study of War a

Article content

(Bloomberg) — The price of oil and natural gas jumped as escalating attacks in the Persian Gulf threatened long-term damage to major energy facilities.

Article content

European gas futures surged as much as 35% to more than double their pre-war level and Brent crude rose as high as $117 a barrel. 

Article content

Article content

An Iranian missile inflicted “extensive damage” on a Qatari complex housing the world’s largest liquefied natural gas plant. Also, a gas facility in Abu Dhabi was shut after being hit by falling debris from an intercepted strike and two oil refineries in Kuwait were set ablaze by drone attacks. Saudi Arabia was assessing damage after a drone fell on a refinery near the Red Sea. 

Article content

Article content

The attack on Qatar raises the specter of higher long-term energy prices resulting from the US and Israel’s war on Iran. While oil and gas flows through the Strait of Hormuz could resume once the conflict ends, any badly damaged production facilities in the region could take much longer to recover. 

Article content

Article content

“LNG from Qatar could in principle be offline for months and, in the worst case, for years,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management. “For the gas market, the crisis does not end simply because the war ends and the Strait of Hormuz reopens.”

Article content

President Donald Trump responded by pressing for a de-escalation. He said Israel would refrain from further strikes on Iran’s South Pars gas field — the attack that prompted Tehran’s retaliation against Qatar. However, the president also said that the US would “massively blow up the entirety” of South Pars if Iran targets Qatar’s LNG facilities again. 

Article content

QatarEnergy said several of the LNG facilities inside its Ras Laffan Industrial City were attacked by missiles, “causing sizable fires and extensive further damage.” While shipments from the LNG plant had already been halted earlier this month due to the war, the latest strikes threatened a longer-lasting supply disruption.

Article content

Article content

Full details of the extent of the damage and the timeline for repairs aren’t yet known. While Asian countries buy most of the LNG shipped from the Middle East, any prolonged disruption to flows would shrink the global supply balance — keeping prices elevated worldwide. Natural gas futures in the US, also a major exporter of LNG, rose as much as 6.5% on Thursday. 

Article content

Shell Plc’s Pearl gas-to-liquids plant also sustained damage, the company said. A fire has been extinguished and the facility is in a “safe state,” according to a statement. Essential staff are safe and the extent of the damage is being assessed.

Article content

“A retaliatory attack on Ras Laffan is exactly what the global natural gas market feared the most,” said Tom Marzec-Manser, Europe gas and LNG director at consultancy Wood Mackenzie Ltd. “We’re yet to know which part of the industrial complex has been damaged, but either way it’s going to be bullish.”

Article content

Abu Dhabi shut the Habshan gas facilities after the interception of missiles targeting the plant and an oil field resulted in falling debris. No injuries were reported, the Abu Dhabi Media Office said in a post on X.